The Government has set out how councils in England will be funded from 2026/27, with new funding formulae based on 2025 indices of deprivation, population projections and service demand.
As part of the Fair Funding Review 2.0, it has also pledged: £2.4 billion for children’s social care reforms; £2.4 billion for a new ring-fenced and combined homelessness, rough sleeping and domestic abuse grant; and a £600 million recovery grant for areas with the greatest immediate needs and less ability to raise income locally.
Cllr Pete Marland, Chair of the LGA’s Local Government Resources Committee, said: “There are some positive measures included in these reforms, such as multi-year settlements, fewer fragmented ring-fenced grants and reduced reliance on competitive bidding. However, some councils will clearly do better than others from these allocation plans.
“It is good that government has pledged some extra transitional support, but we reiterate our call for all councils, rural and urban, to be protected from real-terms cuts to ensure their financial sustainability.
“It is now critical that the provisional local government finance settlement is published as a matter of urgency, so councils are not waiting until the Christmas period to understand what allocations they will receive.
“Greater financial certainty and a simpler funding system are important, but council finances remain under severe pressure. Councils are facing huge cost increases in areas including adult social care, temporary accommodation, SEND and home-to-school transport, so need a significant boost in resources to prevent widespread financial failure.”